Get rid of unprofitable ones

Think of your business as a warehouse.  You can’t possibly move in new products if your floor is covered with broken, dusty, obsolete items.  Before you can get better customers, you need to do a thorough “spring cleaning” of the customers and relationships that are just cluttering your activities, your people and your capital.

But how do you get rid of old customers efficiently and professionally while minimizing complaints and ill will?  The following six-step plan will help you “clean house” and then keep it that way:

  1. Decide on pricing and profitability floors:  After reviewing your customer history, decide on minimum levels of sale size, profit margin, product/service mix, etc.
  2. Create minimum product/service packages:  Based on the prior step, define clear packages for “trial” or to attract new clients, for ongoing maintenance, as well as other projects.  Make sure the packages you define encompass the needs of the clients which you rated as A, B (possibly C) when you completed your Customer Profile.
  3. Establish levels of service:  All time costs you opportunity.  Determine levels of service by how much time will be needed, who will be needed, as well as when or how quickly (speed of response).  Clearly define these service levels for each package.
  4. State payment and termination policies:  Require a deposit or credit card commitment at the onset of any agreement – this will quickly separate real, paying clients from those who may default later.  Also clearly state termination policies – for the client and for you.
  5. Submit new pricing/contracts to all existing customers: Allow 2-4 weeks for signature or decline. This is also a great opportunity to sit down with your customers, at all ratings and explain your services, your value and your packages.
  6. Work out a transition plan:  For industries such as professional services, devise a transition plan to another service provider or to internal to the customer.  But be clear on timing and scope so the transition does not drag out.

How have you “cleaned” house?  What worked and what do you wish you had done differently.  Share in the Comments section below or on our Facebook page.

Next Week – Part 3: Attracting More “A-Rated” Customers

Leave a Reply

Your email address will not be published.